China and India slowdown fuels tougher race

TOKYO (Reuters) – A sudden slowdown in car sales in China and India is threatening to shrink the global auto market this year, promising tougher times for an industry leaning on the two most populous countries to pick up the slack in the West.

Early this year, industry executives had been optimistic that demand in the world’s second- and 11th-largest car markets would charge ahead, despite fallout spreading from the U.S. credit crisis.

But inflation, led by soaring fuel costs, and other economic problems have caught up with car consumption much faster than expected. In July, car sales in China rose 6.8 percent from the year before, the slowest pace in two years, while sales in India fell for the first time in about three years.

And while booming fuel and commodities prices have powered a faster-than-expected sales surge in resources-rich Russia, Brazil and the Middle East, that hasn’t been enough to make up for struggling demand almost everywhere else.

Reuters UK